Anyone Can Start a Company: The Real Question is SHOULD YOU?
It's never as easy, as fast or as glamourous as it may seem...
From the outside looking in, the idea of starting your own company often seems like a glamourous, self-enriching lottery ticket. There are certainly plenty of examples to perpetuate that belief. Even in the case of the most meticulous dramatizations of the greatest success stories in business (e.g. the movies), the reality is never what is portrayed. Throughout my now 40+ year career (I started young…LOL), I have seen it all (most of it for sure)…at least enough to cite the thoughts and examples that follow with confidence, if not certainness.
The truth is that ANYONE can start a company. Fill out some incorporation papers, secure an EIN number, create a website. This can all be done in a matter of hours. The question is, is that company truly a business? What is the distinction you might ask? From my perspective, one is an empty shell, a nebulous undefined entity…the other is viable endeavor, with the potential to have some manner of impact beyond the founder, which eventually results in gains for the founder and others. It comes down to three key questions – why, what and how?
THE WHY - Could I or Should I?
Over the years I’ve met countless entrepreneurs, all with a hunger for the “dream”…some starving for it more than others. Many ask for help to realize that dream, whether the help requested comes in the form of cash, counsel or some combination of the two. So, what determines who I’ll invest in (time or money)? The WHY…
The first question I ask is “WHY do you want to start a company”? While I’ve heard a pretty broad range of answers over the years, most fit into a few common buckets, for and against. I’ll start with a few of most compelling reasons NOT to start a company:
I’m tired of working for other people
I’ve always wanted to have my own company
My X (sibling, parent, friend, colleague, etc.) has their own company
I invented the coolest “widget” in my basement, garage, etc.
These may be factors on some level in the decision to start a company (not a business…yet), but I’ve never seen a real success coming out of someone who has these as primary motivators. So, you may ask, what is a good reason? There’s really only one:
X or Y or Z really pisses me off!!!
There are examples out there of successful businesses which started purely from a major innovation, the “it’s never been done before”. Regardless of that innovation, any and every business must ultimately satisfy a need, e.g. solve a problem. That is the first test, does my ideal truly solve a problem? A few key questions to help with that test:
What is the problem that brought me here?
What is the impact of the problem (economic impact, social impact, etc.?)
Who has the problem? (and how many “who’s” are there?)
What will someone other than me pay to solve the problem?
THE WHAT – What Product / Service / Solution Am I Going to Offer?
The “Why” should help you determine if there are enough people (or companies) that have a high enough pain threshold accompanying the “problem” to build a business around. From there it is important to understand the problem from THEIR perspective (not just your own) in order to determine WHAT you are going to bring to market.
One great indicator that you are onto something will be the willingness of other people to give you some of their time to help you refine your product offering. For most people, time a far more important commodity than money, so if they are willing to give you that time, that’s positive in and of itself. Unless the people you speak with are friends…friends will give you false indicators that include their time and generally positive feedback intended to make you feel good about your idea.
Once you have some people (again, not friends) willing to give you some feedback, make sure to actually listen to what they have to say. Some important questions to ask:
How have you tried to solve the problem previously?
Why didn’t that work out for you?
What would the ideal solution look like?
What would it be worth to you?
These are fairly simple, open-ended questions, but they reveal a TON of very valuable information:
Who you’re competing against.
What deficiencies exist in the current market offerings.
What someone is willing to pay for.
At the end of the day it isn’t about what you like as the founder, inventor, etc. It is 100% about how you solve the problem differently and better than what is out there, at a price people are willing to pay.
PS…a great book to help you get to market with something compelling is The Lean Startup by Eric Ries…recommend it highly to anyone starting a company.
THE HOW – Building the Company to Deliver the Product / Service / Solution
The “HOW” is where you start to move from strategy to tactics…figuring out how to build it, deliver it, service it, etc. This is where the realities start to settle in, particularly the financial realities. Key questions to ask yourself:
What is necessary to deliver the product AT SCALE?
o Engineering & Design
o Manufacturing (physical products)
o Tech Stack (SaaS, etc.)
How is the product / service going to be Distributed / Delivered?
How are you going to market / sell the Product / Service / Solution?
What does the team look like, e.g. what skills and experience is necessary to succeed, from the beginning of the sell cycle through to the receipt of payments?
What does the revenue look like (including payment cycles)?
So much of the above depends upon the nature of the Product / Service / Solution. More importantly, it depends upon the wants and expectations of the customer you’re going to be servicing. What is it going to take, not just to satisfy them but to delight them, as that is key to making a company scalable and sustainable.
WHERE Do You Go from Here?
Obviously, there is a lot more to this than can be addressed in a single book, much less a single post. It does, however, give you a solid starting point, a point where you can make a more educated decision whether or not to invest the time and money it’s going to take. Done properly, the “homework” above will get you ready to not only pitch but defend (not only to investors but other stakeholders).
When you start to have the discussions that will validate or invalidate your business keep in mind the following:
You have two ears and one mouth for a reason…LISTEN.
Ask open ended questions and be careful NOT to guide someone towards your idea (ideally, don’t even mention your idea (let them paint a picture, not color in between the lines…)).
Be honest with yourself, above all, about the feedback you receive.
Expect that if you decide to move forward, it’s going to take twice as long as you expect and cost three times as much (or more).